City is financially strong, investors told
With a surplus of R4.2 billion, the City of Johannesburg was in a strong financial position, Reggie Boqo, Group Chief Financial Officer told investors at the Hilton Hotel in Sandton on Wednesday.
This was at the first of the Investor Roadshows to promote the City as a viable investment destination. In line with its major priority of attaining financial sustainability and resilience, the City’s revenue also increased from R36 billion to R39 billion in the 2013-2014 financial year, Boqo said.
“Our main revenue streams remain unchanged from the previous financial year, with service charges and property rates accounting for 73% of the total revenue generated. Of significance is the fact that the City has shown less reliance on government grants, although these contribute to 20% of total revenue, which is consistent with the prior year,” he said.
Investors also heard that the City had increased the value of its asset base from R60 billion to R67 billion. Capital expenditure also increased from R4.3 billion to R7.3 billion.
Boqo said the City continued to maintain its healthy liquidity levels, with a closing cash balance of R5.3 billion, compared with R5.4 billion the previous year. A total of R1 458 billion was raised in bonds. He said that also of significance was the fact that the City was able to increase its total income by 13%, with revenue collection rate settling at 94%, even though a rate of 95% or more would have been preferred.
“While the City is committed to prudent management of finances and clean administration, employee costs increased by 6% due to annual increases of salaries. Contracted services increased by 13% mainly due to increased projects that the City has committed to with the aim of improving service delivery.
“The City’s dedication to achieving clean administration continues to bear fruit with the achievement of an unqualified, audit opinion once again,” Boqo said.
He added that it was also pleasing that the City had maintained its respectable credit ratings.